Memorial Health ends 2015 with $22 million net loss similar to 2014

Friday

Feb 19, 2016 at 11:28 PM

Jan Skutch

The parent corporation of Memorial University Medical Center ended 2015 with a net loss of $22 million, but with a $4 million positive cash flow, according to Maggie Gill, president/CEO of Memorial Health, on Thursday.

The year-end figures are close to those for 2014 and contained few surprises, Gill said.

"We expected much of this," she said.

The numbers:

â¢ Revenue: $565.5 million

â¢ Expenses: $589.7 million

â¢ Net Loss, after investments: $22 million

â¢ Positive cash flow: $4 million

The key drivers, several of which reflect on-going concerns, were:

â¢ Drug costs spiked by $5 million, an increase being felt throughout the health care industry.

â¢ An increase in depreciation and interest spent on capital expansion projects.

â¢ Additional costs of the Epic Electronic Health Records, $5 million of which was in 2015.

â¢ Charity care increased by $5.5 million.

â¢ Bad debts, or payments not collected from patients, increased by $6 million.

On a positive note, Gill said the health care provider increased revenues and patient volume by 2.4 percent.

"It's not like we're shrinking," Gill said. "We're growing."

The challenge lies in reductions stemming from the Affordable Care Act, commonly known as Obamacare, and continued cuts, other government penalty programs and rapid growth in high-deductible plans resulting in a reduction on collectable revenue, she said.

Harry Haslam Jr., who on Wednesday was reappointed as chairman of Memorial's 18-member governing body, said in a Wednesday night letter to team members, physician leaders and board members that money was not the only issue.

"This is not just about money," Haslam said. "It is about our services. It is about treating all patients, regardless of ability to pay.

"It is about having the resources needed to support our team and continue to provide medical education. It is about affiliating with a health care system that shares our culture and values."

Novant negotiations ongoing

Meanwhile, Memorial continues negotiations on a strategic partnership with Winston-Salem, N.C.-based Novant Health, which Haslam has said is key to providing Memorial Health with a stable financial base and an opportunity to accomplish goals it cannot do alone.

That has involved ongoing negotiations between the Memorial Board, Chatham County Hospital Authority, Chatham County, hospital physicians and management.

Memorial Health employs about 4,659 people or the equivalent of 3,791 full-time employees plus about 735 people on the medical staff, 153 employed physicians, and 141 residents.

In response to the annual report, Dr. David Byck, chief of the medical staff, said: "The information relayed to the medical staff from our board seems well received and supported by the medical staff. This affiliation (with Novant) will allow us to continue high quality care for our patients and helps us to preserve the core missions of our hospital."

Haslam addresses Memorial team

In his letter to Memorial leaders, employees and physician leaders, Haslam said the final 2015 results "were as expected, which is to say, challenging."

"Given all that we had to manage, we should be proud of to realize positive cash flow, revenue growth and improvement in quality," Haslam said. "Our goals are consistent: preserve Memorial's mission and meet community need; expand clinical services, improve quality, maintain local influence and enhance Memorial's commitment to Chatham County."